An emerging theme for 2018? - ANZ

Analysts at ANZ explained that one of the ongoing talking points in markets domestically of late has been the likely changes to the RBNZ’s mandate and operating model following the election of a new government. 

Key Quotes:

"But it appears that New Zealand is not the only one set to take a look at how monetary policy operates. A number of key Fed officials have reportedly commented in the past few weeks on now being the time (perhaps given upcoming changes in leadership) to review how US monetary policy works too. 

Bloomberg report that Fed presidents Williams, Mester, Bostic, Evans and Harker have all made some form of comment on this recently. 

As opposed to New Zealand, where the discussion is more around the addition of an employment mandate and committee structure, in the US it appears the discussion is more on whether 2% is still an appropriate inflation target in a world where real neutral interest rates have fallen. 

Allowing inflation to run a little higher would therefore provide officials with a little more policy wriggle room in the future. Perhaps it goes without saying, but if the US is taking a look at this, then others will likely too, so it could be an emerging theme for 2018."